Early last year, the current administration announced that the EPA’s Energy Star program was among those going on the chopping block as part of the planned 2018 federal budget. The Energy Star program is widely employed by property owners and managers to benchmark the performance of their buildings nationwide with an eye to improving efficiency and reducing costs. Since the launch of Energy Star for buildings, the voluntary program has saved consumers more than $430 billion — while operating on an annual administrative budget of only $57 million.
Though the Energy Star program has been maintained, its budget has unfortunately been slashed nearly in half for 2018, which has certain potential ramifications for those who employ Energy Star Portfolio Manager as part of their benchmarking process for their buildings. We spoke with several representatives at MACH Energy, who recently released a report, “Energy Star: An Analysis of Economic Benefits to the Built Environment,” that is the result of polling thousands of building professionals about their experiences with the Energy Star system. Kristin Rock, Vice President of Customer Service, Cliff McAuliffe, Vice President of Customer Success, and Marketing Manager Laura Sallette took the time to weigh in on what may lie ahead for the Energy Star program.
First of all, for those who don’t know, what can you tell us about Energy Star and Portfolio Manager?
Laura Sallette: Energy Star was founded in 1992, originally as a consumer-labeling program. Some of the first Energy Star-labeled projects were actually personal electronic appliances — things like computers and fax machines. [In 1995,] Energy Star for buildings was launched, and then in 2000, the Energy Star score was published and Portfolio Manager was launched. That really helped kind of drive energy efficiency within buildings, and create that movement, I would say. … Portfolio Manager is Energy Star’s free online tool that allows any building owner to track, monitor and measure their building’s energy consumption. Their building is not benchmarked against other buildings that use Portfolio Manager. I think it’s every four years, the Department of Energy has a survey, which is called the CBEC Survey — the Consumer Buildings Energy Consumption Survey — which the EIA, that falls under the DOE, [conducts] every four years, and then that actually comprises the database within Portfolio Manager. So the buildings that use Portfolio Manager are benchmarked nationwide against buildings of the same type, as opposed to buildings that only use Portfolio Manager.
The only issue is that the last time all of this information was updated in Portfolio Manager was in 2003. They keep saying that 2018 will be the year when they’ll be able to update all of the information with the most current CBEC Survey, which I think was from 2012, but if there’s a loss in funding, that might jeopardize the situation. Right now, even though all buildings have an Energy Star score and are being benchmarked, they’re actually being benchmarked against very, very old data, which is data from 2003.
What is MACH’s role in all of this?
Kristin Rock: A really common question that we get, from, in particular, customers that own large portfolios of buildings all across the country — ‘How do we measure these buildings against each other to see how they’re performing relative to each other?’ We can go through a lot of exercises to be able to pinpoint different criteria that might help them narrow that down, but a really good way to actually compare your buildings against each other within their own portfolio is to use the Energy Star score, because it’s taking into account the weather conditions at your particular building. It’s taking into account all of the factors you input that determine how your building is using energy and what might be driving higher energy consumption.
The way that our data integrates with Energy Star — we collect 15-minute interval data from buildings that we monitor. And we can partner with Energy Star a couple of different ways. We can either read the Energy Star score directly from Portfolio Manager — we connect through an API data exchange directly to Energy Star. So the minute you, as a building operator, change one of your building criteria in Energy Star or change some of your energy consumption information — anything like that — our system automatically updates to reflect whatever the score is in Energy Star. So it allows building operators to see what their Energy Star score is, in real time. They don’t have to go look in Portfolio Manager. What they need to know is right there, on the dashboard of our software. We can also push data into Energy Star. Since we’re collecting all of that energy data, we can help save customers time by just pushing that data directly into Energy Star, and it saves them the effort of having to enter their bill data every month, or contracting with another firm that might provide that sort of service.
Cliff McAuliffe: Our business model has always been, helping our owners and managers of offices and other commercial real estate have visibility and understanding of how they use energy, and what they can do to improve operations to reduce their costs. There’s a real value proposition in our business model, but it goes hand-in-glove with the Energy Star Portfolio Manager by showing that by improving operations, that you can increase your Energy Star score. So they go in parallel. You get the value proposition that our analytics create in terms of dollar savings, but the Energy Star score rise goes right along with it. And so we’ve watched the engagement of the commercial real estate community’s use of Energy Star Portfolio Manager increase more and more as the years have gone by.
What are the specific concerns with regard to the changes implied by the slashing of the budget for Energy Star?
LS: In January 2017, the administration had suggested slashing the EPA’s budget, so a lot of the EPA’s programs were on the chopping block. A lot of people were concerned and speculating what was going to happen. In September, the House of Representatives passed an appropriation package that actually preserves the Energy Star program, but its budget is going to be slashed by 53 percent [this year]. The 2018 spending bill would fund Energy Star at $31 million, compared to 2017, [when] that funding level was at $66 million.
In November, the House Energy and Commerce Subcommittee was still reviewing the Energy Star Reform Act, which proposes returning Energy Star to the DOE. Energy Star is, again, currently under the EPA. I’m not quite sure what benefit it would receive by being transferred under the Department of Energy. And then, again, there was also another suggestion from the current administration that Energy Star should be run under a non-governmental entity. Any of these three scenarios — losing funding, being transferred under the DOE, or even being run under a non-governmental entity, would — there’s still so much speculation on what that could mean. A loss of funding could mean, maybe, the CBEC score is not able to be fully updated into Portfolio Manager so that a lot of these cities and states nationwide that are using Portfolio Manager to benchmark their buildings, they’re going to be continuously using very, very outdated information. And then, how does that really help incentivize buildings to reduce their energy consumption if they’re going on a false or outdated score? Secondly … on a national level, we’re not really too sure what would happen if it would go under the DOE, but definitely, if it was being transferred to a third party or non-governmental organization, the trustworthiness and the reliability of the brand that has been cultivated in the last 20 years, that consumers have really — consumers, and even companies and industries, have really grown to trust and rely on, and support — is, unfortunately, probably going to be called into question, if you have it run by a private organization.
KR: Most of the engineers that we work with are dedicated to proactively managing energy within their buildings regardless of their Energy Star score, so certainly that’s a way for them to measure their success in doing that. That said, anything that causes uncertainty in a marketplace can have business impact, so there’s always a chance that somebody at the management level decides, ‘Well, if we’re not baselining our buildings’ stock in this way, then maybe I’m not going to put as much of a priority on energy management, and I’ll focus my attention somewhere else. Anytime you have that kind of uncertainty, that can drive change and behavior. … I think the uncertainty leaves people in a holding pattern.
So what’s the takeaway? What is the future of Energy Star?
LS: One of the things that we saw, when the U.S. as a whole pulled out of the Paris Climate Accord, you saw certain cities in particular stepping up to say, ‘Well, we’re going to continue with our commitment that we made relevant to the Paris Climate Accord. I think, if we see Energy Star Portfolio Manager collapse or be abandoned, or if the data from 2003 doesn’t really get updated, it’s possible that you could start seeing certain cities abandoning Portfolio Manager as their baselining metric and going to their own homegrown baselining metrics for their own cities, kind of like what Chicago is talking about now. Chicago is talking about incorporating Energy Star into that scoring system, but ultimately, you could have a different scoring system in San Francisco than in New York, than in Chicago, than in Los Angeles, which is OK if you’re an operator with one or two buildings in Los Angeles and all you’re worried about is the scoring system in Los Angeles, but that could certainly be problematic for big-portfolio companies that have properties in every major city, trying to have some sort of consistency across their property base, and to know where they stand with all of those diversities. Fragmenting or fracturing of the baseline is going to start to happen.
KR: Regardless of what happens with Energy Star, there’s still an enormous amount of incentive to be as proactive as possible when it comes to managing energy within your building. So no matter what happens to Energy Star as a platform, you can drive an enormous savings without having to have significant capital investment just by paying extra-close attention to some of your operating patterns — your startup time; your shutdown time. That drives real dollar savings. Don’t let the politics around Energy Star derail your efforts around having a sustainable building. There are intrinsic benefits to having an energy-efficient building, regardless of what that means for the plaque on your door.